Saudi's nonoil private sector shows solid growth

The Saudi British Bank (SABB) has published the results of the headline SABB/HSBC Saudi Arabia Purchasing Managers’ Index (PMI) for March 2013, a monthly report issued by the bank and HSBC. It reflects the economic performance of the Saudi nonoil producing private sector companies through the monitoring of a number of variables, including output, orders, prices, stocks and employment. The latest survey data pointed to a further solid improvement in overall business conditions at nonoil producing private sector companies in Saudi Arabia. The seasonally adjusted headline PMI posted 58.9 in March, up slightly from February’s 58.5. Operating conditions have improved in every month since data collection began in August 2009. Saudi Arabia’s nonoil producing private sector companies reported further solid growth of output in March, and linked this to increased new business. The rise in order book volumes was mainly driven by ongoing improving economic and political conditions, according to panelists. New work grew at the sharpest rate in five months, with more than half of respondents indicating a rise in incoming business. New export business also increased at a marked rate. Work-in-hand increased for the second month running in March, but the rate of backlog accumulation remained modest. Around 11 percent of companies recorded an increase in outstanding business and 10 percent reported a fall. Vendor performance improved further during the latest survey period, and at a sharper rate than in February. According to anecdotal evidence, the shortening in average lead times was partly driven by improved payments and, in some cases, a change of suppliers. March data signaled a further rise in employment levels at nonoil producing private sector companies in Saudi Arabia. Companies commonly mentioned increased new business as the main driver behind the latest hiring of staff. Overall input prices increased at the sharpest rate in six months during March. An increase in purchase prices and staff costs contributed to the latest rise in overall input prices. In response to higher input costs, nonoil producing private sector companies in Saudi Arabia raised their output charges in March. Driven by higher new business, purchasing activity increased at the sharpest rate in six months during March. Almost one-in-three respondents reported an increase in buying, while only 5 percent indicated a fall. Meanwhile, inventory levels also increased in Saudi Arabia’s non oil-producing private sector. There was some anecdotal evidence that the rise was driven by greater in work-in-hand and increased new business. Source: Arab News